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PROJECT WORK ON

CONDITION RESTRAINING ALIENATION

CHANAKYA NATIONAL LAW UNIVERSITY

SUBMITTED TO: SUBMITTED BY :


DR. P.K.V. SITA RAMA RAO BABLI RAJ

(FACULTY OF PROPERTY LAW) B.A LL.B

ROLL NO- 1523

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DECLARATION BY THE CANDIDATE

I hereby declare that the work reported in the B.A. LL.B (Hons.) Project Report entitle
CONDITION RESTRAINING ALIENATION

Submitted to at Chanakya National Law University, Patna is an authentic record of my


work carried out under the supervision of Dr. P.K.V Sita Rama Rao. I have not submitted this
work elsewhere for any other degree or diploma. I am fully responsible for the contents of my
Project Report.

(Signature of the Candidate)


BABLI RAJ
Chanakya National Law University, Patna

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ACKNOWLEDGEMENT

Any project completed or done in isolation is unthinkable. This project, although prepared by
me, is a culmination of efforts of a lot of people. Firstly, I would like to thank our Professor
Dr. P.K.V. Sita Rama Rao for, helping me in making the project on CONDITION
RESTRAINING ALIENATION for his valuable suggestions towards the making of this project.

Further to that, I would also like to express my gratitude towards our seniors who did a lot of
help for the completion of this project. The contributions made by my classmates and friends
are, definitely, worth mentioning.

I would like to express my gratitude towards the library staff for their help also. I would also
like to thank the persons asked for help by me without whose support this project would not
have been completed.

I would like to express my gratitude towards the Almighty for obvious reasons. Moreover,
thanks to all those who helped me in any way be it words, presence

Encouragement or blessings...

-BABLI RAJ

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CONTENT PAGE

SERIAL NO. NAME OF CHAPTER PAGE NO.


1. AIMS AND OBJECTIVES 5

2. HYPOTHESIS 5

3. LIMITATIONS 5

4. REVIEW OF LITERATURE 5

5. RESEARCH METHODOLOGY 5

6. SOURCES OF DATA 5

7. CHAPTERISATION:
1. INTRODUCTION
2. CONDITIONAL TRANSFERS
3. TYPES OF RESTRAINT
4. EXCEPTIONS TO SECTION 10 6 to 18
5. CONCLUSION

BIBLIOGRAPHY 19

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AIMS AND OBJECTIVES
1. To know about conditional transfers.
2. To know the type of restraint.
3. To know the exceptions to Section 10.
HYPOTHESIS
The researcher presumes that the
1. Every owner of property who is competent to transfer, has freedom of transferring his
properties either unconditionally or subject to certain conditions.
2. Condition which absolutely restrains alienation is void.

REVIEW OF LITERATURE

The researcher has examined the primary and secondary sources of data in the project. The
primary sources is Constitution of India, legal provisions and case laws. The secondary
sources are books, journals, magazines, newspaper etc.

RESEARCH METHODOLOGY

This research work will be relied upon doctrinal form.

SOURCES OF DATA

PRIMARY SOURCES

Constitution of India
Legislative Provisions
Case laws

SECONDARY SOURCES

Books
Websites

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INTRODUCTION

Before 1882, when the Transfer of Property Act came into being, the transfers of immovable
properties in India were governed by the principles of English law and equity. The Act of
1882 came in force on the 1st day of July, 1882, and it extended to the whole of British India
except the territories administered by the Governor of Bombay in Council, the Lieutenant-
Governor of the Punjab and the Chief Commissioner of Burma.

The Transfer of Property Act 1882 is an Indian legislation which regulates the transfer of
property in India. It contains specific provisions regarding what constitutes transfer and the
conditions attached to it.

According to the Act, 'transfer of property' means an act by which a person conveys property
to one or more persons, or himself and one or more other persons. The act of transfer may be
done in the present or for the future. The person may include an individual, company or
association or body of individuals, and any kind of property may be transferred, including the
transfer of immovable property.

Property is broadly classified into the following categories:

1. Immovable Property (excluding standing timber, growing crops, and grass)


2. Movable Property

The Interpretation of the Act, says "Immovable property does not includes standing timber,
growing crops or grass". Section 3(26), The General Clauses Act, 1897, defines, " immovable
property" shall include land, benefits to arise out of land, and things attached to the earth, or
permanently fastened to anything attached to the earth. Also, The Registration Act, 1908,
2(6)

"immovable property" includes land, buildings, hereditary allowances, rights to ways, lights,
ferries, fisheries or any other benefit to arise out of land, and things attached to the earth or
permanently fastened to anything which is attached to the earth, but not standing timber,
growing crops nor grass.

A transfer of property passes forthwith to the transferee all the interest which the transferor is
then capable of passing in the property, unless a different intention is expressed or implied.

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CONDITIONAL TRANSFERS

Ownership of the property carries with it certain basic rights, such as a right to have the title
to property, a right to possess and enjoy it to the exclusion of everyone else, and a right to
alienate it without being dictated to, save in accordance with a provision of law. An absolute
right to dispose of the property indicates that the owner can sell it for consideration or can
donate it for religious or charitable purposes he may gift it to anyone, mortgage it or put it up
for lease.

Where property is transferred subject to a condition or limitation absolutely restraining the


transferee or any person claiming under him from parting with or disposing of his interest in
the property, the condition or limitation is void, except in the case of lease where the
condition is for the benefit of the lessor or those claiming under him: provided that property
may be transferred to or for the benefit of a woman (not being a Hindu, Mohammedan or
Buddhist), so that she shall not have power during her marriage to transfer or change the
same or her beneficial interest therein.

Every owner of property who is competent to transfer, has freedom of transferring his
properties either unconditionally or subject to certain conditions. In a transfer of property
where a condition is laid down by the transferor, the transfer is a conditional transfer.
Conditions are limitations which limit or otherwise affect the transfer.

Condition may be

i. Condition Precedent
ii. Condition Subsequent

Condition Precedent is that condition which is prior to the transfer of property and whether
the transfer would take place or not, is itself dependent on that condition. It precedes the
transfer of property. It is prior to the transfer transfer. Section 25 deals with condition
precedent. Under this section, a condition precedent is void if its performance is either
impossible or unlawful and, where a condition precedent is void the transfer of property too is
void.

Condition Subsequent is a condition which is required to be fulfilled after the transfer of


property has already taken place. That is to say, a condition subsequent affects the interest of
the transferee after the transfer. Sections 10, 11, 12 and 17 of the Act deal with condition

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subsequent. In these sections, certain conditions subsequent have been declared void. Void
condition subsequent has no effect and the transferee is not bound by it; he may or may not
fulfil it.

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TYPES OF RESTRAINT

Restraint means preventing or stopping or disabling a person from doing something. Right of
disposal is one of the essential features of ownership. Section 10 incorporates the rule that
any restriction on the right of disposal would be against this essential feature of ownership
rights. Accordingly, Section 10 provides that if a transfer is made subject to a condition by
which the transferee (who now becomes owner) is absolutely restrained from disposing of or
parting with his interest in the property, the condition is void. In such cases since the
transferee becomes owner of that property, any restriction limiting his right of disposing the
property would not be binding on him and he would be free to transfer it to anybody by any
means. For example, A makes a gift of his house to B subject to the condition that B shall not
sell it. The condition being absolute restraint on Bs right of disposal is void and B is not
bound by it. If he sells the property, the sale is valid.

Absolute restraint

Section 10 declares a condition to be void when it absolutely restrains alienation. Restraint on


alienation is absolute if it totally takes away or curtails the right of disposal. Fry LJ observed
thus:

From the earliest times, the courts have always leant against any device to render an estate
inalienable.1

The restraint may be absolute as a restriction on the power of alienation in point of time or as
to a particular or specified person only or of any other form. Partial restraints are not
prohibited. The question whether the restraint in question is absolute or partial is to be
gathered from the contents of the deed. The words of the cause should be so interpreted as to
bring them into harmony with other provisions of the deed.2 Absolute restraint, therefore,
refers to a condition that attempts to takes away either totally or substantially this power of
alienation.3 The use of the term absolutely also suggests, that where the restriction is partial,
or little, it will be permitted. This means that some or little control over the power of
alienation, of the present owner by the previous owner is allowed.

1
In re Parry and Dags, (1886) 31 Ch. D. 130 at p.134 cited in Mitras Transfer of Property Act, Ed. XIII, p. 111
2
Thomas v. Dr. A.A. Henry, AIR 2008 NOC 1414(Ker) (DB).
3
Bhavani Amma Kanakadevi v. CSI Dekshina Kerela Maha Idavaka, AIR 2008 Ker 38.

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A testator makes a will of certain properties in favour of his son with a condition that if he
sold it during the lifetime of his wife she will have an option of purchasing the property at the
rate of one-fifth of the market value. This condition is an absolute restraint on the power of
legatee (son) for a particular time. Here, the condition is void because it is restraining
alienation during a life time.4

A husband settles his properties on his wives subject to a condition that they cannot transfer
the property without his consent. The condition is void as it takes away the power of
alienation of the wives absolutely.5

An absolute right was vested in the defendant, an adopted son, in respect of properties
bequeathed to him under a will. It was held that no further condition could be imposed, as
per section 10 and 11, restraining alienation of the property or by creating a restriction
repugnant to the interest created in the property. The will contained a direction that the
property was to be applied and enjoyed in a particular manner. The legatee would receive it
in a manner as if the will contained no such condition, by virtue of the provision in Section
138 of the Succession Act.6

There is sale of certain lands through registered sale-deed. Immediately after the sale, the
seller and purchaser enter into an agreement according to which the purchaser or his heirs
shall have no right to alienate the said lands. The agreement is void as being violative of
Section 10 of the Transfer of Property Act. The purchaser and his heirs are free to transfer or
otherwise dissipate the land.7

Partial Restraint

Section 10 is silent about the situation where the restraint is partial. Where the restraint does
not take away the power of alienation of the transferee substantially but only limits it to some
extent, the restraint is partial. A partial restraint is valid and enforceable.

In Muhammad Raza v. Abbas Bandi Bibi,8 the condition restricted the transferee from
transferring the property to strangers, i.e., outside the family of the transferor, the Privy
Council held that the condition was merely a partial restraint which was valid and

4
Rosher v. Rosher, (1884) 26 Ch. D. 801.
5
Gomti Singh v. Anari Kuar, AIR 1929 All.492.
6
Achammal v. Rajamanickam Karthikeyan, AIR 2010 Mad 34
7
Brahma Nand v. Roshani Devi, AIR 1989 HP 11
8
AIR 1932 PC 158

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enforceable. Similarly, where a condition was included in the sale- deed that the property
should not be sold outside the family of the vendor but the transferee sold it to the first cousin
of the vendor, the Bombay High Court held that the condition was a partial restraint and
valid. The court observed that the first cousin very much belonged to the vendors stock
(family).9

A piece of land was purchased, not acquired, for the purposes of a University. Subsequently
the land was transferred to a Development Authority for housing complex. The sale deed
contained no restriction on use. The University had no objection. The court held that the
erstwhile landowners who had a decade ago transferred their land at full value could not be
permitted to question the use of land.10

It is only a condition which absolutely restrains the transferee from disposing of the interest
that is rendered void. It follows that a condition imposing a partial restraint on alienation is
valid. It follows that a condition imposing a partial restraint on alienation is valid. Sir George
Jesel in the In re Maclea said :

The test is whether the condition takes away the whole power of alienation
substantially; it is a question of substance and not of mere form. And he proceeded to add :
You may restrict alienation in many ways, you may restrict it by prohibiting it to a particular
class of individuals, or you may restrict alienation by restricting it to a particular time.

It has been also held that a restriction for a particular time is not a partial but an absolute
restraint. In Renand V. Tourangean,11 the Privy Council said that a restriction for a period of
twenty years was contrary to the general principles of jurisprudence.

Restraint on alienation in compromises

Section 10 provides that where a property is transferred subject to any condition absolutely
restraining the transferee from disposing of the property, the condition is void.

Compromise is not a transfer of property within the meaning of Section 5 of this Act.
Therefore, Section 10 is not applicable to compromises made in family settlements and such
a compromise is valid even if it involves any restraint on alienation. A Compromise by way

9
Manohar Shivram Swami v. Mahadeo Guruling Swami,AIR 1988 Bom. 116 ; Dinesh Chhapolia v. State of
Orissa, AIR 2008
10
Jagtar Singh v. State of Punjab, AIR 2012 P&H 145.
11
(1867) L.R. 2 P.C. 4.

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of settlement of family disputes has been held to be valid, although it involves an agreement
in restraint of alienation.

In Mata Prasad v. Nageshar Sahai,12 there was a dispute over succession to the properties of
the deceased between his nephew and his widow. It was compromised between them under
which the widow was to hold the possession of the property for her life while admitting the
title of the nephew but nephew was restrained from transferring the property during the life of
the widow. The Privy Council held that the compromise was valid and enforceable and could
not be treated as a condition restraining alienation.

Applicability of Section 10

The provision laid down in Section 10 are based on the rule of equity, that property should
not made inalienable permanently. Therefore, the provision of this Section may be applied
also to those transfer which are not governed by this Act. For example, Section 10 has been
applied to transfers in Punjab where the Transfer of Property Act is not applicable 13or it has
been made applicable to a transfer to a Hindu idol which is outside the scope of this Act.14

However, the law laid down under Section 10 does not apply where the transfer is by
operation of law. Therefore, the general restriction on assignment does not apply to an
assignment by order of the court or an assignment made under any law. Restraint on
alienation include in a sale by the order of the Court under an execution would not be void
under Section 10.15

In Laxmamma v. State of Krnataka,16 it was held that a grant made by Government in


accordance with law is not a transfer within the meaning of this Act; therefore, a permanent
restraint on alienation of the grant, if authorized by law applicable to such grants, would be a
valid restraint.

12
AIR 1925 PC 272
13
Nand Singh v. Pratap Das, AIR 1921 Lah. 674
14
Ramchandraji Maharaj v. Lalji Singh, AIR 1925 Pat.49
15
Mahendra v. Gagan Chandra, AIR 1925 Cal. 471
16
AIR 1983 Karn. 237.

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EXCEPTIONS TO SECTION 10

Section 10 makes two exceptions to the general rule that conditions absolutely restraining
alienation are void. The first exception is in respect of leases and the second is regarding a
property which is transferred to a married women.

Leases

Lease of property is a transfer of right to enjoy the property, for a certain period of time or in
perpetuity, for consideration paid or promised by the transferee. In a lease transaction, the
owner of the property is the transferor and the tenant is the transferee. It is a transfer of
limited interest where the transferor (lessor) reserves the ownership and transfers only the
right of enjoyment to the transferee (lessee). Therefore, a lessor can impose a condition on
the lessee that he shall have no right to sub- lease or assign his interest to another person.
Such condition, although it is a restraint on the lessee (transferee) against alienation, is valid
and he cannot transfer his interest without the consent of the lessor.

The exception with regard to leases is applicable also to permanent or perpetual leases.In
Raghuram Rao v. Eric P. Mathias,17 the Supreme Court held, in the case of perpetual leases,
too any condition restraining the lessee from alienating leasehold property is not illegal or
void. Explaining the law on this point the Supreme Court observed:

This section does not carve out any exception with regard to perpetual or permanent lease. It
applies to permanent or temporary lease. In view of the specific exception carved out in case
of lease, in our view, there is no substance in the contention..that the condition which
restrains the lessee from alienating (perpetual) leasehold property is in any way illegal or
void.

Thus, a condition in a perpetual lease that lessees right is not transferrable is a valid
condition. If the lessor does not expressly say that breach of this condition would terminate
the lease then, upon the breach of such restraint (i.e. where lessee transfers his interest) the
remedy of the lessor is not a suit for ejectment. The lessor can file a suit against the lessee
only for injunction and damages for the breach of condition.

17
AIR 2002 SC 797

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Married Women

Where a property is transferred to a married woman who is not a Hindu, Muslim or


Buddhist, the transferor can impose a condition restraining alienation. Such condition shall
not be void under Section 10. Similar provisions are there in the Married Womens Right to
Property Act, 1874 which is applicable to married women who are not Hindu, Muslim or
Buddhist. The personal laws of Hindus, Muslims and Buddhists already provide for the
validity of restraint on alienation of the married women of these communities. Thus, a
property may be transferred to a married Hindu woman for her life with a condition that she
cannot transfer it. Reason behind such a restraint is to safeguard the interest of the married
women who could be easily exploited by their unscrupulous husbands.

Idol

A deed dedicating property to deity contained a condition absolutely restraining its transfer.
The deed was held to be valid. Section 10 did not apply as a deity is not a living person.
Protection from alienation of minors property is also available to the property of a deity.
Permissible of the District Judge is necessary for alienating by manager the property of the
deity. Insecurity of the family of the shebait due to communal violence was not regarded by
the court as a legal necessity.18

Right of repurchase

There was an agreement that the property was to be reconveyed to the vendor within ten
years. The vendor subsequently transferred his right of taking back the property to another
person, (plaintiff in this case). It was held that the plaintiff had become entitled to repurchase
the property under the agreement of re-conveyance. There was nothing to show any
restriction upon the right of assignment or transfer. The right of repurchase could not be
treated as personal.19

Section 10 not only to Apply to Court Sales

Section 10 applies only to transfers made by the act of the parties and does not apply to a sale
under The Companies Act, 1956, nor to transfers by operation of law taking effect in invitum

18
Shyamal Ranjan Mukherjee v. Nirmal Ranjan Mukherjee, AIR 2008 NOC 568 (All).
19
Raghunath Bali v. Pandit Sriniwas, AIR 2012 Utt.100.

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at a sale in execution of a decree.20Similarly, s. 10, does not apply to partition and family
arrangements, but restraints clearly offending the rule are void.21

Difference between Sec. 10 and Sec. 11

Section 11, provides that in the transfer of absolute interest of property, if the transferor
imposes any condition restraining the mode of its enjoyment, the condition is void and the
transferee is not bound by such condition. Absolute interest in a property means ownership.
Where a property is transferred absolutely, there is transfer of ownership and the transferee
gets all the incidents of ownership including the rights to use or enjoy the property as he
likes.

If a property is transferred absolutely in favour of the transferee, then any condition or terms
of transfer, restricting the full enjoyment of the property (i.e.) repugnant to the interest
created, then the transferee is empowered under sec 11 of TP Act to receive and dispose the
property as if there was no such condition.

Under Sections 10 and 11 both, the condition subsequent curtailing the rights of a transferee
are declared void. But the provisions of these two sections may be distinguished as under-

1) Section 10 is applicable to the transfers of absolute interest as well as limited (partial)


interest whereas, Section 11 is applied to transfers of only absolute interest
(ownership).
2) Section 10 refers to a restraint on alienation i.e. under Section 10 the condition is that
transferee cannot transfer the property. In Section 11 the restraint is on the mode of
enjoyment i.e. under Section 11, the condition is that transferee cannot have the free
enjoyment of the property.

While Section 10 of the Transfer of Property Act deals with a restriction against the transfer
of interest conveyed absolutely, Section 11 of the Transfer of Property Act
deals with the restrictions on the enjoyment of such interest conveyed absolutely. In fine,
while Section 10 refers to a restriction on the transfer of property, Section 11 refers to a
restriction on the enjoyment of the property. The principle behind Section 11 is that a
condition repugnant to the interest created absolutely is void. It is well settled in law that a
partition is not actually a transfer of property. The partition signifies the surrender of a

20
Gomti Singh v. Anari Kaur, AIR 1929 All 492.
21
Rani Mewa Kuwar v. R Rani Hukas Kuwar, 1 IA 157 PC; AIR 1939 Mad 769.

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portion of a joint right in exchange of a similar right from the co-sharer. The partition effects
a change in the mode of enjoyment of property, but is not an act of conveying property from
from one to another. In other words, partition is a process, in and by which, a joint enjoyment
is transformed into an enjoyment severally. Hence, partition is not actually a transfer of
property, but would only signify the surrender of a portion of a joint right in exchange of a
similar right from the other co-sharer or co-sharers. A right of partition, therefore, being an
incident of joint ownership of property, any restriction repugnant to such right or interest is
invalid as per Section 11 of the Transfer of Property Act.22.

22
Atika Begum, Amina Bi, Hajira and 2 Ors. vs Haji A.A.M. Abdulla,Habbeb and 113 Ors. (2002)

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CONCLUSION

Under this act it is permissible to make a transfer subject to conditions, but such conditions
must not contravene the provisions of the Act. There are some conditions which are declared
void by the Act, and the transfer takes effect as if no such conditions had been attached to the
transfer. On the other hand, there are certain conditions which, if imposed, render the transfer
itself void. Section 10 is one of the group of sections which deals with void condition of the
former type.

This section lay down that where property is transferred subject to a condition absolutely
restraining the transferee from parting with his interest in the property, the condition is void.

The principle underlying the section is that a right of transfer is incidental to, and inseparable
from, the ownership of the property. The rule that a condition of absolute restraint is void, is
founded also on the principle of public policy allowing free circulation and disposition of
property.

Section 10 of the Transfer of Property Act relieves a transferee of immovable property from
an absolute restraint placed on his right to deal with the property in his capacity as an owner
thereof. As per this section a condition restraining alienation would be void. The section
applies to a case where property is transferred subject to a condition or limitation absolutely
restraining the transferee from parting with his interest in the property.

This section provides that where property is transferred subject to a condition or limitation
absolutely restraining the transferee or any person claiming under him from parting with or
disposing of his interest in the property, the condition is void. Therefore, such a condition
imposed by a by- law on its member that he cannot alienate the property to anon- parsi is
prima facie illegal. Moreover, every citizen has a right under Article 300-A of the
Constitution of India, to property, and such a right cannot be deprived except in accordance
with law. Even under Article 19 of the Constitution of India, the citizen has a fundamental
right to reside and settle down in any part of Indian Territory. If there can be a restriction on
such a right, the same could be only by an appropriate Legislature, the same could be
examined from the stand point of whether it is reasonable restriction or otherwise. A by- law
being not law cannot restrict the rights of citizen.

If the condition does not take away the power of alienation absolutely, but restricts it
partially, it would be binding on the transferee and he cannot avoid it. If he does, he would be

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guilty of committing a breach of a condition of the contract. It is only a condition which
absolutely restrains the transferee from disposing of the interest that is rendered void. It
follows that a condition imposing a partial restraint on alienation is valid.

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BIBLIOGRAPHY

BOOKS

Poonam Pradhan Saxena,Property Law, 2nd Edition 2011

S.N Shukla ,Transfer of Property Act, 29th Edition 2015

R.K. Sinha,The Transfer of Property Act,17th Edition2016

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